The Nevada Governor’s Office of Economic Development has conducted an audit of Tesla’s and parter Panasonic’s spending in Q4 2017. The office found that the combined capital investment at the Reno Gigafactory continued to exceed benchmarks set to earn state tax incentives.
The news comes as a welcome positive story for the company while it rides out shockwaves emanating from recent Elon Musk tweets about potentially taking Tesla private. The audit found that Tesla spent a mind-boggling $459 million in capital at the Gigafactory in the fourth quarter, bringing cumulative capital spending up to $3.7 billion by the end of Q4 2017.
The total exceeds the minimum capital investment benchmark set by the company in cooperation with state officials back in 2014 when the initial tax subsidy package was approved. If you add in the $402 million in spending for the first half of 2018, Tesla has already exceeded $4 billion in capital spending at the Gigafactory, making it clear where its profits are going for those who weren’t paying attention.
On the employment front, Tesla added more than 34% more employees, with 832 new hires being added in Q4. The surge brought total enrollment at the Gigafactory up to 3,249. On top of the new Tesla employees, the Gigafactory employed 1,332 new construction workers, bringing the total number of construction workers to 13,743 — or more people than the town I grew up in.
Indeed, the thought of a single facility only a few years old employing 16,992 employees is staggering and puts some scale to the work happening at the Gigafactory in support of Tesla’s Model 3 production ramp. Hiring, work, and spending at the Gigafactory must continue if Tesla is to have any shot at hitting its 10,000 per week production target of the Model 3 next year.
News of Tesla spending what it said it would spend and hiring as many people as it said it would hire was received positively by the executive director of the Office of Economic Development, Paul Anderson. He recognized Tesla’s diligent adherence to achieving targets set years ago, even in the face of so much change in the intervening years.
“Tesla is an outstanding partner for Nevada, from surpassing their performance benchmarks at the Gigafactory to their $37.5-million pledge in support of science and robotics programs at our schools, they’ve done everything they said they would do and more. We’re very proud to have Tesla as a member of the Nevada family,” Anderson shared.
Critics of the 2014 subsidy package were quick to chime in with their staunch disapproval of the 4 year old plan, alleging that Nevadans are picking up the bill on increased state spending on schools, roads, public safety, and more, but such critics illogically ignored the sizable taxes paid by Tesla in the state, not to mention taxes paid by employees working at the factory.
Bob Fulkerson, co-founder and state director of the Progressive Leadership Alliance of Nevada, sounded his tired horn yet again, relating that, “We can want Tesla to succeed and we can want them to pay their fair share of taxes and not get away with robbing the store, which is what they are doing.” This is why I could never be a politician. The highly prevalent nonsensical resistance to letting the past be the past and resistance to solving today’s problems with a long-term approach together just frustrates the hell out of me, to be perhaps a bit too honest.
Tesla shared that all of the spending and new employees meant that the battery factory exceeded a run rate of 20 gigawatt-hours per year — or more than 1.67 gigawatt-hours per month. The updated production numbers make Tesla the largest battery producer in the world “by a significant margin,” according to the RGJ. For perspective, if all of those batteries went straight into Tesla’s Long Range Model 3s, the company would be able to churn out just over 22,000 Model 3s per month.
With Tesla having already achieved an admittedly forced run rate of 5,000 Long Range Model 3s per week (and possibly now 6,000 per week), the new data from the Gigafactory highlights that an equal, if not greater, amount of work than what is being put into Tesla’s Fremont factory is also being applied at the Gigafactory as it works to produce the new 2170 cells for Tesla’s products.
If that were only the whole story, it would be more palatable, but Tesla also needs its new batteries for its Tesla Energy products, like its Powerwall residential energy storage pack, which also has long backlogs from high consumer demand, and the much larger Powerpack. Looking at these numbers, it’s no wonder Tesla leaned on Samsung to provide the battery cells for its 129 MWh grid-tied battery installation in South Australia.